At least 500,000 spindles and 600 looms either closed or
lying idle depriving over the economy of over $500 million in exports. Mohsin
Aziz, Chairman All Pakistan Textile Mills Association (APTMA) has claimed that
if these closed spindles are revived and the Export Refinance Facility (ERF) is
allowed on yarn, textile industry may contribute an additional export worth one
billion dollars per annum.
Mohsin Aziz, Chairman, All Pakistan Textile Mills Association
(APTMA) while speaking at the annual dinner organized by APTMA Islamabad
extended the assurance recently.
Chief Executive General Pervez Musharraf along with his
Federal Ministers, Governors from all the four provinces, diplomats, dignitaries
and prominent figures from all walks of life attended the dinner.
The Chief Executive while addressing the audience said that
the country was facing a 'do or die situation' therefore all the stakeholders in
the country should work jointly to achieve the dream of joining the comity of
nations with our heads held high. He also said that time for discussion and
preparing strategies was over and now it is the time for implementation.
Acknowledging the outstanding contributions made by the
textile sector for supporting the economic reform plans launched by the present
government, Gen. Pervez Musharraf admitted that on the economic front only the
textile sector has bounced back while other sectors of the economy show no sign
of improvement. He said these efforts in all other areas of his government
showing positive results but unfortunately the economy was very slow in
recovery. The Chief Executive appreciated the textile industrialists for their
confidence in the National economy depicted by their investment of over $500
million in Balancing, Modernization and Replacement (BMR) in the textile sector
and also for increasing exports by over 12 per cent.
Gen. Pervez Musharraf however categorically said that
survival of Pakistan lies in its economic revival and for economic revival we
need to revive the industry, especially the textile sector. He further said that
the government do not want to export raw cotton but the farmer is getting the
right price, we will not stop him from exporting, if the textile sector need
this cotton, they should pay the price which the farmer is being offered by the
international buyers' he observed.
Abdul Razzak Dawood, minister for commerce while speaking on
the occasion highlighted the features of the long-term textile policy envisaged
in 'Textile Vision-2005'. He announced duty free import of Ring Spinning Frames
for the Textile Industry. The minister also assured that adequate financing for
BMR of the textile industry and all other facilitating incentives and support
would be provided for revival of the textile industry and its exports. The
minister also announced the promulgation of the Ordinance for Corporate
Industrial Re-structuring Committee, which will shortly undertake revival of
Sick and Closed Industrial Units.
In his welcome address, Mohsin Aziz, welcoming the positive
support extended by the government to the textile industry highlighted the
problems faced by the industry. He said complex and confusing Income Tax and
sales tax laws and procedures needed to be urgently revised. He said that
present income tax and sales tax laws are draconian and needed to be revised
He regretted that in spite of the instructions of Minister
for Finance and Governor State Bank, the banks are reluctant to extend financing
for urgently required BMR of the textile industry. Unless the banks changed
their attitude towards the textile industry the investment of Rs333 billion
required for increasing the textile exports from existing $5 billion to $14
billion by 2005 will not materialize.
He urged the government to restore refinance on yarn. He
assured that if export refinance on yarn is allowed the industry would increase
exports by an additional $500 million per annum. Similarly, he proposed revival
of 5 lakh spindles and 600 looms that are lying idle closed units. Their revival
at a negligible cost will also contribute additional exports of $500 million
annually, he assured. Mohsin also urged the Chief Executive to immediately allow
gas connections for generators installed by the textile units to overcome the
irregular and uncertain supply of electricity.
He regretted that in spite of repeated announcements and
pronouncements by the previous governments, large sectors of the textile economy
were free from levy of GST. The policy of constant persuasion employed by the
present government has borne fruit and these sectors are now gradually coming
with the ambit of GST. Once their little irritants are removed they shall be
fully integrated into the mainstream of textile industry.
There is also this lingering problem faced by the industry of
over due Refunds on Exports. The difficulty is occasioned because of prolonged
verification and authentication of refund documents. If starting point of Sales
tax is from the Yarn stage instead of Cotton, many irritants will be removed.
For Sales tax on other value added export items, a system can be evolved whereby
adjustments will be made instead of refund. This will relieve us of unnecessary
and unproductive activities, thereby making everyone contended including the
Mohsin also pointed out that because of the 'On and Off'
supply of electricity and its high cost, many textile mills have imported
generators run by gas. He urged the government that gas connections for the
generators in the textile units are allowed. He also pointed an anomaly that
sales tax adjustment is presently allowed on all machinery but ironically it is
denied on generators. He demanded of the government that sales tax adjustment be
also allowed on generators.
He said that a very important decision was taken by the
Economic Advisory Board about reducing the number of levies on the industry.
This decision has not been implemented so far. An early action in this regard
will go a long way to clear many cobwebs, he said.
He said that Industry as well as the government both agree on
increasing the production and exports of textile from Pakistan. However there
are more than 500,000 spindles and 600 shuttle-less looms lying idle as closed
units. Their revival will no doubt contribute additional exports of $500 million
Mohsin observed that Pakistan's economic and social destiny
is in our own hands. There is no such thing as and with no strings attached. If
we do not keep our house in order and carry on borrowing in order to survive,
then there is no option for us but to accept the dictate of the lenders, no
matter how disgraceful it may be. Pakistan has the opportunity and the capacity
to achieve in the next ten years, what we have failed to achieve in the last 53
years. Towards that end there has to be readiness and willingness to accept the
challenge like true soldiers of Islam. 'We cannot wait for a dead man's shoes
because if we do, we may long enough go barefoot'.
Earlier in a meeting held at Lahore, APTMA Chief expressed
his appreciation over the governmentís decision to restore the refinancing
facility on Export Bleached and Unbleached (Grey) Fabrics. The decision will go
a long way and help in increasing exports.
The government has taken this decision with less than a month
on the recommendations made by APTMA. The decision is aimed at reviving the
stagnant export sector and extend its helping hand to the textile industry grant
of refinance facility on 10 per cent mark up on export of Bleached and
Unbleached Grey fabrics and thereby paved the way for the over due break
through. An audible sigh of relief resounded among the weaving segment of
textile sector and the weaving sector has now to cheer over the inclusion of
fabrics under concessionary refinance facility.
Now it should be possible for the exporters of fabrics to
sell at competitive rates in the world market and the objective of the
government to boost export will not be defeated. It seems necessary to reiterate
once again that these measures are being taken by the government with a view to
help the textile industry tide over its present difficulties and to restore its
viability and competitive ability.
The textile industry has to be thankful that it has not been
treated as 'Children of Lesser God'. It is another matter that it has not been
treated with due warmth and affection as was merited. But then the industry has
learnt to live and thrive while being treated as one who deserves a sweet along
with a kick.
APTMA however has urged the government to grant of similarly
concession to spinning sector as well, the fact of the matter is that spinning
segment has become an eye-sore for some people in authority and a deliberate
policy being adopted to cripple it. The present government acknowledges this
fact that perpetuates the misery or nullifies its own efforts of revival of the
vital segment of textile chain.
The pivotal role that export play in a developing country
like Pakistan is a well recognized fact that needs no overemphasis. The textile
sector in general and spinning sector in particular has always been looked as of
paramount national importance especially for mobilizing foreign exchange
resources to meet the growing needs of development activities and to refine the
balance of payment position. The overall export performance crucially depends
mainly on the export behavior of cotton yarn and cotton fabrics.
Value addition no doubt is the requirement of the day. There can be
substantial value addition in yarn and fabrics but for that a comprehensive
expansion programme is needed. There are still miles to go before industry rises
and shines as has been envisaged to move into production and export of finer
counts and other value added yarn. Government should design its incentives
system in a manner that should promote value addition and not to revoke the
favourable arrangements. Export Refinance Facility on all kind of yarn is
immediately restored. A target of $8 billion is set for the textile sector the
year 2000-2001. Export of value added product could be increased to a certain
extent. Yarn to the extent of 90 per cent is being exported to non-quota
countries, which means unlimited market excess. The potential as well as
exportable surplus in the form of cotton yarn and blended yarn exists. Provided
favourable facilities such as export refinance at the reduced mark-up rate is
offered to compete in the global market sooner Pakistan realize, better the
results will be achieved. More we delay, others will fill the gap. If the need
of growth of this sector is acceptable in the textile vision 2005, the suitable
policies and measures are vital to provide the necessary stimuli for growth and
development. Otherwise other alternative is stagnation and ultimate death of the
great sector with such glorious and vast potential. Pakistan is a major world
exporter of yarn and supplies about 30 per cent of the world market. What better
proof can there be of the excellent quality and competitiveness of Pakistan
textile industry? , Mohsin questioned.